Saturday, 30 December 2017

Stocks fall, oil rises

Markets were mostly lower on Friday.

The S&P 500 fell 0.5 percent, the STOXX Europe 600 fell 0.4 percent and the Nikkei 225 fell 0.1 percent.

However, oil rose. West Texas Intermediate crude rose 1.0 percent and Brent rose 1.1 percent.

Friday, 29 December 2017

Markets mixed, Bitcoin plunges

Markets were mixed on Thursday.

The S&P 500 rose 0.2 percent but the STOXX Europe 600 fell 0.3 percent and the Nikkei 225 fell 0.6 percent.

Bitcoin prices plunged as much as 11 percent on Thursday after South Korea announced that it was eyeing options for stamping out speculation on cryptocurrencies.

“Cryptocurrency speculation has been irrationally overheated in Korea,” the government said in a statement. “The government can’t leave the abnormal situation of speculation any longer.”

Thursday, 28 December 2017

Markets rise but credit markets pose risks

Markets were mostly higher on Wednesday.

The S&P 500, the STOXX Europe 600 and the Nikkei 225 all rose 0.1 percent.

Adam Sarhan, chief executive of 50 Park Investments, said that “the bulls remain in control”.

However, some analysts warn that a bubble is forming in credit markets and companies are overextending themselves to a degree that could spell trouble ahead.

Wednesday, 27 December 2017

Market volatility to increase “dramatically” in 2018

US stocks returned to trading on Tuesday by closing lower. The S&P 500 fell 0.1 percent on light volume.

However, as 2017 winds to a close and investors look ahead to 2018, George Brooks at Investor's first read warned that volatility is likely to increase in the coming year.

“I see volatility increasing dramatically,” he wrote last week. “I can see two major corrections in 2018 (10% to 14%), the first starting in January, the second around mid-year.”

“Odds of a bull market top in 2018 are 50-50,” he added, with the possibility of “one more speculative surge”.

Tuesday, 26 December 2017

Nikkei 225 rises in thin trading

Most major markets were closed on Monday.

In Japan, the Nikkei 225 rose 0.16 percent to close at its highest since 9 January 1992.

“Purchases of exchange-traded funds by the Bank of Japan and buying of semiconductor-related issues probably helped push up the market,” said Yoshihiko Tabei, chief analyst at Naito Securities Co.

However, falling issues outnumbered rising ones 1,073 to 889 on the TSE’s first section and volume declined to 1.056 billion shares from Friday’s 1.489 billion shares.

Saturday, 23 December 2017

Markets mixed, separatist concerns in Spain rekindled

Markets were mixed on Friday.

The S&P 500 was essentially flat, the STOXX Europe 600 dipped 0.1 percent and the Nikkei 225 rose 0.2 percent.

Spain's IBEX 35 fell 1.2 percent after the separatist movement won parliamentary elections in Catalonia, raising fears of a return of political tension in Spain.

After a strong year, Capital Economics said that 2018 will not be as good a year for risky assets with earnings unlikely to surge and monetary policy poised to become a little less supportive.

It added that “while political developments are even harder to predict, the boosts from the prospects of U.S. tax cuts and the fading of protectionism fears were probably one-offs”.

2017 is expected to end on a positive note though.

“It’s hard to imagine equities not being held up going into December-end due to a bit of year-end portfolio fluffing,” said Tim Kelleher, head of foreign exchange institutional sales at ASB Bank in New Zealand. “We’re going to have a pretty good December on equities.”

Friday, 22 December 2017

US stocks rise as overbought market “still looks good”

US stocks rose on Thursday. The S&P 500 advanced 0.2 percent.

“The seasonal Santa Claus rally is at hand, and we think it will help prevent a pullback before year-end,” said Katie Stockton, chief technical strategist at BTIG.

The rise on Thursday left the S&P 500 just 0.4 percent below its all-time high, leaving the market overbought.

According to Ryan Detrick, senior market strategist with LPL Financial, that is bullish.

Detrick said that since 1950, in the 13 times that the S&P 500 has become this overbought, the market has risen the following year all but once, seeing an average annual move higher of 11 percent.

“Things still look pretty good, even though we are still historically overbought here,” Detrick told CNBC on Wednesday.

Thursday, 21 December 2017

US stocks dip after tax bill passed as another valuation measure hits Internet bubble level

The US stock market fell on Wednesday despite passage of the tax-cut bill by Congress. The S&P 500 slipped 0.1 percent.

Craig Erlam, senior market analyst at Oanda, said that it is likely that the tax legislation is “almost entirely priced in at this point”.

Diane Jaffee, senior portfolio manager at TCW, expects “the market to pause in January” but “ultimately continue to climb thanks to revenue and earnings growth”.

Indeed, Jonathan Golub, Credit Suisse's chief US equity strategist, told CNBC that stocks could see another year of double-digit gains as “the economic upsides from these tax changes start to hit in late 2018”.

Still, the US stock market is already expensive. According to Bloomberg, the S&P 500 is now trading at 2.3 times sales, a level it had not touched since the days of the Internet bubble.

Wednesday, 20 December 2017

US stocks fall, tax cut in focus

US stocks fell on Tuesday, with the S&P 500 declining 0.3 percent.

Wharton School finance professor and longtime market bull Jeremy Siegel suggested on Tuesday that more declines may be ahead.

“I'm very positive on the tax plan but it's buy on the anticipation, sell on the news,” he said on CNBC.

Nevertheless, Jeremy Klein, chief market strategist at FBN Securities, said that the “certainty” of the tax cut “precludes share prices from taking a meaningful tumble in the short term”.

Tuesday, 19 December 2017

US stocks hit record amid rising confidence on tax cut

Markets rose on Monday.

The S&P 500 rose 0.5 percent to close at a record, the STOXX Europe 600 jumped 1.2 percent and the Nikkei 225 surged 1.6 percent.

Stocks rose amid increasing confidence that the Republican Party's tax-cut legislation will be passed.

Tony Roth, chief investment officer at Wilmington Trust, expects “a pretty significant benefit to lower tax rates, which still haven’t been fully baked into the market”.

Indeed, most Wall Street analysts expect the S&P 500 to push further into record territory in 2018.

“The coming reduction of U.S. corporate tax rates may be one of the biggest positive catalysts for U.S. equities this cycle,” said Dubravko Lakos-Bujas, US head of equity strategy at JP Morgan.

Monday, 18 December 2017

Surge of cash into stocks could mean meltup

Richard Bernstein, CEO of Richard Bernstein Advisors, thinks that equities will go higher next year.

“Earnings around the world are still accelerating,” Bernstein told CNBC last week. “It's really hard to get a bear market going when earnings are accelerating.”

However, Bernstein added that “most people really are bearish”.

Which would seem strange to hear after another CNBC article reported a surge in investor cash into stocks.

Citing data from Bank of America Merill Lynch, the report said that large inflows of cash into ETFs more than offset outflows from mutual funds.

“The flow-of-funds case for a meltup is mounting as more hot money pours into equity ETFs,” said Ed Yardeni, founder of Yardeni Research.

Saturday, 16 December 2017

Markets mixed amid uncertainty on US tax reform

Markets were mixed on Friday.

The S&P 500 rose 0.9 percent to close at another record high but the STOXX Europe 600 fell 0.2 percent and the Nikkei 225 fell 0.6 percent.

Jasper Lawler, head of research at London Capital Group, wrote in a note that dip-buyers “failed to materialize, fearing the ticking clock on U.S. tax reform”.

Other analysts are optimistic.

“There is definitely a momentum in the market thanks to the prospect of tax cuts, but let’s not forget that the economic growth is also pretty good and has been supporting the market all year,” said Kim Caughey Forrest, senior analyst and portfolio manager at Fort Pitt Capital Group.

Friday, 15 December 2017

Markets fall, China raises rates

Markets fell on Thursday.

The S&P 500 fell 0.4 percent, the STOXX Europe 600 fell 0.5 percent and the Nikkei 225 fell 0.3 percent.

A day after the Federal Reserve raised interest rates, the People's Bank of China also raised rates, albeit slightly. The PBC increased rates on reverse repurchase agreements by 5 basis points for the 7 and 28-day tenors.

However, the European Central Bank and the Bank of England left their interest rates unchanged.

Thursday, 14 December 2017

Markets mixed as Fed raises rates

Markets were mixed on Wednesday.

In the US, the Dow Jones Industrial Average rose 0.3 percent and the Nasdaq Composite rose 0.2 percent but the S&P 500 was flat.

Elsewhere, the STOXX Europe 600 fell 0.2 percent and the Nikkei 225 fell 0.5 percent.

The Federal Reserve raised its federal funds rate by 25 basis points to between 1.25 and 1.5 percent on Wednesday.

“It was pretty much a certainty that the Fed was going to do what it did,” said Eric Green, senior portfolio manager and director of research at Penn Capital Management. “It was a nonevent that had been fully priced into markets.”

Wednesday, 13 December 2017

S&P 500 hits record as Fed meets

Markets were mostly higher on Tuesday.

The S&P 500 rose 0.2 percent to close at another record high while the STOXX Europe 600 rose 0.7 percent. However, the Nikkei 225 fell 0.3 percent.

The Federal Reserve began its monetary policy meeting on Tuesday, with a rate hike “highly priced in”, according to Kjersti Haugland, chief economist at DNB.

“Market participants are more concerned about a looming recession or low inflation,” Haugland said. “The risk here is that the Fed is correct and wage inflation and consumer inflation will come back with vengeance, in which case they will have to be more aggressive.”

Tuesday, 12 December 2017

Markets rise but “danger of a bubble” in some large stocks

Markets were mostly higher on Monday.

The S&P 500 rose 0.3 percent to a record high and the MSCI Asia Pacific Index rose 0.7 percent. However the STOXX Europe 600 fell less than 0.1 percent.

Oil rose, with West Texas Intermediate crude rising 1.1 percent.

As stocks continued to rise ever higher, at least one fund manager thinks that some of the world’s biggest companies have become overvalued and could be hiding big risks.

Robert Naess, who manages stock investments at Nordea Bank AB, told Bloomberg that companies such as Inc and Alibaba Group Holding Ltd are overvalued and there is “danger of a bubble in them”.

Monday, 11 December 2017

US stocks could crash 25-50 percent

The S&P 500 hit a record high on Friday but some see rising risks of a US stock market crash.

Saxo Bank’s head of FX strategy John Hardy said that there is a risk that a number of asset bubbles built up during 2017 could burst in the year ahead.

“In 2018 we see the pendulum swinging back in favor of pronounced volatility risks as the irony of long periods of quiet and complacency in asset markets is that they sow the seeds for future volatility as investors underestimate tail risks and overleverage their bets on a continuation of the cycle,” he said.

Among the risks he sees are a spike in US Treasury yields and a 25 percent plunge in the S&P 500.

Meanwhile, David Tice, who runs the Prudent Bear Fund, told CNBC that there is “potentially a 50 percent chance there will be a 25 percent rally” in 2018.

However, he also said that there is a 25 percent chance of a 50 percent decline.

“Longer-term, the market is going to suck,” he said.

Saturday, 9 December 2017

Markets rise after positive economic reports

Markets rose on Friday.

The S&P 500 rose 0.6 percent to a record high after a report on Friday showed that the economy created 228,000 jobs in November.

J J Kinahan, chief market strategist at TD Ameritrade, described the report as “really good”.

The STOXX Europe 600 rose 0.7 percent after the UK and the European Union reported progress on negotiations over the terms of the former's exit from the latter.

The Nikkei 225 led Asian markets higher, jumping 1.1 percent after economic data from China and Japan beat expectations.

Friday, 8 December 2017

Markets rise but vulnerable to sell-off

Markets were mostly higher on Thursday.

The S&P 500 rose 0.3 percent, the Nikkei 225 jumped 1.4 percent while the STOXX Europe 600 was flat.

As the S&P 500 snapped a four-session losing streak, Bank of America's Stephen Suttmeier said that “the market's going to follow that traditional December pattern, where you're sort of weak in the first half of the month and then have that Santa Claus rally in the back half”.

However, Byron Wien, vice chairman of Blackstone's Private Wealth Solutions group, said that the market “is overbought and investors are optimistic”, which leaves it vulnerable to a sell-off. “A 10 percent correction could come along at any time,” he said.

Still, Wien thinks that fundamental “are very strong” and that a bear market is not imminent.

In contrast, John Mauldin, president of Mauldin Solutions, thinks that there is overwhelming evidence that the US stock market is heading for disaster.

“In 2018, a lot of chickens are going to come home to roost in Washington, on Wall Street, and in the media centers of New York City and Los Angeles,” he wrote. “I personally think the bubble in high-yield debt, accompanied by so much covenant-lite offerings, will be the source of the next true liquidity crisis.”

Thursday, 7 December 2017

Markets fall but US tech stocks rebound

Markets mostly fell on Wednesday.

The STOXX Europe 600 fell 0.1 percent and the Nikkei 225 plunged 2.0 percent.

However, US investors were mostly undaunted. The S&P 500 was flat while the Nasdaq Composite rebounded 0.2 percent.

Chris Bertelsen, chief investment officer at Aviance Capital Management, said that tech stocks are just pausing to “refresh a bit”.

“However, it isn’t the end of the world,” he said, adding that “valuations aren’t totally out of control, they are on the high side.”

Wednesday, 6 December 2017

Markets fall but may be set-up for Santa rally

Markets fell on Tuesday.

The S&P 500 fell 0.4 percent, the STOXX Europe 600 fell 0.2 percent and the Nikkei 225 fell 0.2 percent.

Despite the S&P 500 falling for the third consecutive session, some analysts remain hopeful that the rally will resume.

Quincy Krosby, chief market strategist at Prudential Financial, said that “if we were to get a slight pullback, it would be just normal and set us up for a Santa rally in a few weeks”.

“When you have a reversal like you had [Monday] traditionally you have anywhere from two to seven choppy trading days after it,” said Art Cashin, director of floor operations at UBS.

“Around the first two weeks of December, when you look historically at the seasonality, there is a mild bout of weakness in usually the first 10 days of December,” said Todd Sohn, technical analyst with Strategas Research. “Then you get the rally after that.”

“December is usually positive for stocks,” said Oppenheimer technician Ari Wald. “We're not expecting a big pullback.”

Tuesday, 5 December 2017

Dow hits record, “rally looks bulletproof”

Markets were mixed on Monday.

In the US, the Dow Jones Industrial Average rose 0.2 percent to close at a record high but the S&P 500 fell 0.1 percent and the Nasdaq Composite fell 1.1 percent.

Elsewhere, the STOXX Europe 600 rose 0.9 percent but the Nikkei 225 fell 0.5 percent.

US stocks were buoyed by the passage of the tax reform proposal on Saturday but were held back by the decline in large-cap technology stocks.

Still, many analysts think that the bull market has more room to run.

“This rally looks bulletproof because every area of the economy is seeing gains,” says Chris Rupkey, chief financial economist at MUFG.

Monday, 4 December 2017

US stock market “due for correction”

The US stock market rose last week.

The Dow Jones Industrial Average rose 2.9 percent, its biggest gain since December 2016. The S&P 500 rose 1.5 percent.

Technology stocks did not fare as well, though. The Nasdaq Composite fell 0.6 percent.

Leuthold Group's chief investment strategist Jim Paulsen said last week: “I think we're due for a correction and we may well have that in 2018.”

However, Paulsen also said: “I'd look at what I want to buy on the cheap at that point, or I'd allocate more funds too.”

In contrast, John Hussman, president of Hussman Investment Trust, said in his December market commentary that current valuations imply “an interim market loss something on the order of -64%”, with a “likelihood of negative total returns in the S&P 500 over the coming 10-12 year period”.

“I’m not saying that Wall Street is misguided to believe that stocks are appropriately priced here,” he wrote. “I’m saying that Wall Street is spectacularly misguided in that belief.”

Saturday, 2 December 2017

Markets fall but fundamentals “so strong”

Markets mostly fell on Friday.

The S&P 500 fell 0.2 percent, the STOXX Europe 600 fell 0.7 percent but the Nikkei 225 rose 0.4 percent.

The US stock market was affected by news that former national-security adviser Michael Flynn had pleaded guilty to lying to the Federal Bureau of Investigation over Russia's alleged interference in the US elections but analysts appear to remain largely unfazed.

Ryan Detrick, senior market strategist at LPL Financial, said: “Although today’s Washington drama could cause some near-term volatility, the overall economy is on very firm footing and we don’t expect this to lead to a major dip.”

Indeed, Ed Yardeni, President of Yardeni Research, said on CNBC that the stock market is “in the early phases of a melt-up” while Katie Nixon, chief investment officer at Northern Trust, said that fundamentals are “so strong”.

Friday, 1 December 2017

US stocks hit new highs amid optimism over tax reform

US stock markets made record highs on Thursday.

The Dow Jones Industrial Average surged 1.4 percent to break above 24,000 for the first time while the S&P 500 rose 0.8 percent.

The surge was attributed by some analysts to optimism over prospects for the Senate’s passage of a Republican tax-cut plan.

Canaccord Genuity's Tony Dwyer said that if the tax reform package gets passed, the S&P 500 could surge 17 percent from current levels.

“You're looking at over 3100 on the S&P 500,” Dwyer said on CNBC on Wednesday.